How Republicans would change the Senate

An attack on financial regulations and a new push to overhaul the U.S. tax code are just two things analysts expect to see next year if Republicans take the Senate in Tuesday’s elections. At this point, that’s a big “if” — the GOP needs to gain four seats for a majority if President Obama is reelected, and three if Mitt Romney is chosen. Predictions range from no net change to Republicans adding four seats, so the battle for control is about as tight as the presidential race.

Here is a look at three committees important to investors and how they’d change if Republicans reclaim the upper chamber.

Banking

This committee and its chairman-in-waiting Richard Shelby of Alabama would play a big role in throwing out some of the Dodd-Frank rules on Wall Street, one of Romney’s stated goals.

Sen. Richard Shelby

Shelby made that crystal clear last summer when he said in a speech: “I will introduce legislation to repeal Dodd-Frank provisions that had absolutely nothing to do with the financial crisis and any provisions that are imposing unnecessary costs on our economy.”

Shelby, 78 years old, chaired the panel from 2003 to 2007 and was first elected to the Senate in 1986. Shelby, who tried to push tighter rules on Fannie Mae and Freddie Mac through the Senate when he was chair, can be expected to hold comprehensive hearings on the broader U.S. housing finance system if he holds the gavel again come January.

The banking industry says that a thorough review of the Dodd Frank law should happen even if Democrats retain control of the Senate.

“Regardless of who’s in the chair, that review needs to take place,” says James Ballentine, chief lobbyist of the American Bankers Association. Ballentine expects Shelby to stick to his goals including whittling down Dodd-Frank and putting a board, rather than a single individual, in charge of the Consumer Financial Protection Bureau in an attempt to make it more accountable.

Commerce

With the retirements of Sens. Kay Bailey Hutchison and Olympia Snowe, tea-party favorite Jim DeMint of South Carolina becomes next in line to chair the Senate Commerce, Science and Transportation Committee — a panel with a jurisdiction as broad as its name suggests.

Sen. Jim DeMint

Everything from interstate commerce to regulation of consumer products to transportation falls under the purview of the Commerce Committee, a panel now headed by Sen. John Rockefeller of West Virginia.

The 61-year-old DeMint has stated in published interviews that he’d seek to limit what he believes are duplicative highway programs; shrink the U.S. Commerce Department; and overhaul broadcasting regulations if he becomes chair.

The senator, first elected in 2004, clearly favors aggressive deregulation and would offer a hands-off policy to the technology sector, for example.

“Bureaucratic regulators in the federal government will never be able to predict or direct where technology is headed and will only continue to stifle pioneering innovation as they look to regulate developing industries,” DeMint’s web site says.

DeMint’s staunch conservatism could be a stumbling block to forging consensus with panel Democrats — though he has a friendly relationship with Rockefeller.

Finance

Provided he doesn’t lose his own election for a seventh term — a virtual certainty — Sen. Orrin Hatch of Utah would chair the Senate Finance Committee in the event that the GOP takes the Senate.

Sen. Orrin Hatch

The 78-year-old Hatch has said that the prospect of chairing the committee, which deals with taxes and trade agreements, is one of the main reasons he is running again. “It is the most powerful committee in Congress,” Hatch said at a debate with his Democratic challenger Scott Howell in October. “If we’re going to solve the problems in this country, it’s going to be that committee that does that.”

High on Hatch’s to-do list would be comprehensive tax reform, something Scott Hodge, president of the Tax Foundation, says Hatch is well prepared to move forward.

Business groups and both Obama and Romney are pushing for an overhaul of the tax code, and Hodge says Hatch would be more effective than current Chairman Max Baucus at shepherding a big-picture reform of individual and corporate taxes through the panel.

“He can break the log jam,” said Hodge, whose organization advocates lower rates and fewer tax preferences. Hatch says he is committed to a “complete overhaul” of the tax system that would simplify the tax code and encourage investment and savings. A Hatch chairmanship would mean, among other things, efforts at stopping any federal tax increases — one bullet point from his campaign literature.

Hatch’s other goals for the finance committee include repealing Obama’s health-care law and pushing through a balanced budget amendment, two proposals he shares with Romney.

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